Summary
People who bought UST before the depegging bought a stablecoin, many of them put their life savings into a “stable” investment. From the Anchor whitepaper: “Anchor offers a principal-protected stablecoin savings product that pays depositors a stable interest rate” & “Anchor implements a liquidation protocol designed to guarantee the principal of depositors.” The investors that bought 1 UST for $1 deserve to be refunded first and immediately.
Motivation
While UST was crashing, @dokwon told us all to “hang tight” and that he was “Close to announcing a recovery plan for UST.” So, where is the recovery plan? It certainly can’t be this one that downplays the entire utility of UST.
There are quite some people who believed these promises, as there remains over 1.1B currently deposited on Anchor. These people believed in Terra Luna and trusted the founder’s word in a time of crisis.
Talking about forking and giving UST holders a risky LUNA completely unacceptable and related discussions should be tabled until UST investors are refunded.
Proposal
The current revival plan 2 by Do Kwon gets a lot wrong (forking is a terrible idea), but the worst part is that he downplays UST entirely when this was the main draw to the entire ecosystem for many investors. He proposes to give 25% [of the proposed new LUNA] to UST holders at the “Launch” snapshot - 10% unlocked at genesis, rest vested over 2 years thereafter. First of all, UST investors didn’t get involved in a STABLECOIN to wait for 2 years of vesting for an unstable asset. Secondly, taking a launch snapshot will incentivize speculators to buy UST for <$0.10, which will effectively give them 10x return compared to people who bought 1 UST for $1 and kept it on Anchor until now. Many people staked on Anchor, and kept “hanging tight” while you worked on the “recovery plan for UST,” now it’s time to stick to your word and make it happen. LFG should refund all UST stakers on Anchor who remained loyal through all of this turbulence with 1:1 UST:(USDC/USDT/BUSD/etc). After the refund, people should be told to withdraw from Anchor and it should be shutdown completely.
This should be the priority and it should happen before forking or even voting on forking.
It seems clear that there isn’t enough money to refund everyone who lost money, and therefore, a priority must be set and rewarding the people who invested in a stablecoin and trusted the founder to recover it should be first in line. Afterwards, I would agree that people who removed and sold their UST should be refunded whatever they lose due to the depegging, but gathering and proving what happened in each individual case will take a lot of manpower. For example, what if someone sold for $0.80 and bought back the same amount for $0.30? Calcuating the amount to be refunded will be too complicated in many cases.
I agree that people who were staking LUNA during the crash and could not sell due to the lock-up period were also wiped out. However, LUNA was known to be a risky asset and locking your coins would also be susceptible to a crash risk. If the hard fork happens (which I hope it doesn’t), these people should be the ones who gain the most going forward.
By refunding all UST stakers on Anchor who bought UST for $1 before the depegging event, Do Kwon will restore a bit of trust in his word by sticking to what he said during the death spiral. Take this small step forward first, then continue discussing what happens next.
